It will be not be until February 27, 2032, when those now in their late thirties are approaching retirement, that the country’s national debt once again falls back into line with Gordon Brown’s former fiscal rules, an influential think-tank said yesterday.

The Institute for Fiscal Studies (IFS) said that it would take more than 22 years for the public debt, which the Chancellor forecast would balloon to nearly 80 per cent of national income, to drop back to 40 per cent.

It warned that the country should brace itself for “two Parliaments of pain” as the Government scrambled to repair the damage caused by the financial crisis and the resulting £90 billion-a-year black hole in its coffers.

Alistair Darling was forced to suspend Mr Brown’s borrowing rule, which stated that borrowing should not exceed 40 per cent of national income, in November.

The IFS also questioned whether the Government’s plans to levy 50 per cent tax on high earners while also cutting their tax reliefs would generate £7 billion, as the Treasury forecast.

“We think there is a very high degree of uncertainty. It is very difficult to tell how much will be raised,” Stuart Adam, of the IFS, said. He suggested that as wealthier Britons cut their earnings or moved abroad to sidestep the higher tax, spending would fall, denting the Government’s income from consumption taxes — such as VAT — by as much as £1.5 billion.

But it is not only higher earners who will feel the pain in the coming years. According to the IFS, the scale of the problem in the public finances means that the country is set for at least eight years of austerity as the Government slashes spending and raises taxes to try to repair the situation — costing families as much as £2,840 a year.

Robert Chote, director of the IFS, said that the damage wrought by the financial and economic crisis was breathtaking. “The scale of the underlying problem . . . will require two full Parliaments of mounting austerity to repair,” he said.

He said that the Treasury had forecast that the credit crunch had taken a permanent toll of the economy equal to 6.5 per cent of GDP — or £90 billion a year — in lost tax revenues and higher social security costs.

While the small print in the Budget outlined government plans to raise an extra £90 billion a year by 2017-18 to bring borrowing back under control, there was no detail on how at least half of this was to be raised, leading to accusations from the Conservatives about a “tax bombshell” of £1,430 a year for every family.

George Osborne, the Shadow Chancellor, said: “This secret tax bombshell of £1,430 was not even announced by the Chancellor on Wednesday. It shows what a dishonest Budget it was and how quickly it is unravelling.”

Downing Street questioned the way that the IFS figures had been calculated. “It does seem to include efficiency savings that are being made, which is why we are able to have a lower projected growth in public sector current expenditure,” the Prime Minister’s spokesman said. “Therefore it is not entirely clear why we would count an efficiency saving as a cost to a family.”

Mr Chote said, however: “The idea that efficiency savings are free is not true, as otherwise you could use the savings to improve frontline services.”

The IFS has calculated that public services face cutbacks of £26 billion over the next four years to help to balance the country’s finances.

The scale of its analysis is even starker than suggested in the Budget report, and could not be covered by efficiency savings.

“Departmental cuts in spending will not be painless to achieve,” Mr Chote said.

Although hospitals, schools, town halls and others will be encouraged to share purchasing, make better use of office space, sell assets and manage IT more effectively, they may also have to reduce or hive off services.

The IFS analysis suggests that public projects will need to be cut back or mothballed, pay frozen or increased by minimal amounts and jobs lost in the next three years. It said that the squeeze would be as tight as between 1996 and 1999, when hospitals faced soaring waiting lists and cancelled operations as money ran out.

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